Teacher Loan Forgiveness Application

Teacher Loan Forgiveness Application

The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms that comply with the latest stimulus legislation. 

Congress approved the COVID-19 relief package last month and included $284 billion of financing to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus outbreak. The law requires that the SBA issue simplified forms within the first 24 hours of the legislation’s signing into law. This was done to make it easier to apply for forgiveness. It also included conditions that would encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain loans in the past.

Teacher Loan Forgiveness Application

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms that were updated.”

Forgiveness terms in the first draw of PPP loans

Teacher Loan Forgiveness Application – For eligible borrowers First Draw PPP loans can be qualified for loan forgiveness. This happens when the loan payment is made within an 8 to 24 week period.

  • Employee and compensation levels are maintained
  • The loan proceeds are used on payroll as well as other expenses eligible for reimbursement; and
  • At least 60% of proceeds go to payroll costs

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans for eligible customers are eligible for loan forgiveness if the loan is paid within an 8to 24 week time frame.

  • The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
  • The loan funds can be used to pay payroll costs or other expenses that are eligible.
  • At least 60% of proceeds are spent on payroll costs
  • What is the best time to apply for loan forgiveness?

The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower wants forgiveness have been used. The borrower can apply for forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred, and the borrower will be required to make payment to their PPP lender.

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